Bad Quarter, Better Optics: Nike Rallies on Reset Hopes
Plus, I photographed shoes on foot at Sephora in SoHo for subscribers
Nike’s FY4Q25 earnings weren’t pretty—revenue fell 11% in constant currency—but after several quarters of falling short on expectations, investors rewarded the brand for finally delivering on promised metrics, including forward-looking guidance. With multiple investors bought into an inevitable comeback story, the stock soared on the news, leaping an impressive 15%, erasing months of losses and leaving the stock down just ~4% year to date. The print earned Nike an upgrade from Hold to Buy at HSBC, while a few other firms ticked up their targets.
Ahead of the call, CEO Elliott Hill sent an internal email to employees that struck a tone likely to define his era—warm, transparent, and direct (he even encouraged employees to listen to the call!)—even as he acknowledged that some roles would be eliminated. Echoing themes from prior earnings calls, Hill emphasized Nike’s renewed focus on organizing around sport. In the letter, he wrote:
“The approach is that cross-functional teams across Nike, Jordan, and Converse will be aligned to lead with sport. The goal of this sport offense is to obsess the athlete by sport first – to gain insights that are unique to each one. These sport-obsessed teams will be responsible for creating the most innovative and coveted footwear, apparel and accessories across men’s, women’s and kids, telling stories that inspire and resonate with consumers and differentiate us across the marketplace.”
In the email, Hill noted that the change over to sport-centered teams would come with some layoffs as well as new hires.
“Know that the alignment to a sport offense is not an exercise to cut costs and reduce our workforce. This realignment will not mirror the impacts to headcount that you have experienced over the past couple of years. Expect that many of our teammates will experience changes to their role or teams. While we may say goodbye to some teammates, as teams begin to take shape over the next few months, we are also making investments in new roles that create a stronger connection to sport and the consumer.”
The shift was reiterateded on the earnings call, where Hill explained that Nike, Jordan, and Converse teams will swap out the men’s, women’s, and kids’ silos instituted by John Donahoe for organization around five sports, a move he said will sharpen brand distinction, increase competitiveness, and drive growth.
At first glance, the shift seemed fairly standard for a sporting goods company. But in reality, it slammed the door on the Donahoe era—dismantling not just the men’s, women’s, and kids’ divisions he put in place but also setting aside much of what defined his tenure, from an overreliance on digital performance marketing and member-first loyalty schemes to big tech bets like RTFKT. In their place, Hill is re-centering Nike around sport, rebuilding cross-functional teams by category, and doubling down on local activations and emotionally resonant storytelling. The move reads less like a tweak and more like a full reset.
Given Nike earnings met a very low bar, Hill admitted on the call that it has a ways to go before it gets back on a growth track. Reflecting the brand’s myriad challenges, he and CFO Matt Friend used the word “decline” 27 times during the call.
Still, all is not lost. While the brand expects digital traffic to be down “double-digits” throughout fiscal 2026, wholesale bookings are up for holiday versus the prior year in North America, EMEA and APLA, though orders will still be down in China which Nike said will take longer to recover “due to the unique characteristics of the marketplace.”
Nike yesterday released a visual promoting Caitlin Clark’s player edition of the Kobe V Protro, an effort that speaks to Nike’s renewed sports first approach. Priced at $190, the shoe launched today on SNKRS and sold out immediately.
On Nike Basketball’s Instagram account, Clark’s fans were clamoring for the brand to release a signature shoe. As of now, Nike hasn’t announced timing for a signature shoe for the 23-year-old superstar.
Bloomberg recently reported that NikeSKIMS was delayed, which I wrote about in mid May. I still don’t have exact dates, but Brandon, who is known on social media for reliably providing news of upcoming launches, shared with me that he’s seen NikeSKIM product uploads that indicate a October-November launch.
El Segundo, California-based Big 5 Sporting Goods will be acquired by a partnership comprising Worldwide Golf, a 95-store chain, and Capitol Hill Group, a private equity firm based in Bethesda, Maryland. Big 5 operates 414 big box stores averaging 12,000 square feet in 11 mainly Western states.
Known for exuding bargain basement vibes, Big 5 was one of many accounts that lost its Nike account during the great wholesale purge of 2021. When Nike began to reopen wholesale accounts, Big 5, along with Dunham’s Sports, was among the few that were not reopened.
The all-cash transaction was valued at ~$112.7 million. Big 5 stockholders will receive $1.45 per share in cash, a premium of ~36% to the company's 60-day volume-weighted average price. The transaction is expected to close in the second half of 2025.
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